Recent Developments in Canadian Class Action Jurisprudence

In the past year, we have seen continued activity of class action filings in Ontario, Quebec, British Columbia, and Saskatchewan, predominately targeting claims in the automotive, financial, and healthcare and life sciences sectors. We highlight below some key trends from Canadian court decisions from spring 2023 to 2024.

Firstly, a brief review of the criteria around certification (authorization, in Quebec). The certification of a putative class proceeding requires the plaintiff to demonstrate that the plaintiff’s proceeding meets the criteria for certification on a motion to the court.

While the section numbers and wording vary across Canadian provincial legislation, in general, a plaintiff must demonstrate the putative class proceeding meets the following five-part test before the court will certify the claim as a class proceeding:

1. Cause of action—The pleading must disclose a valid cause of action.
2. Class definition—There must be an identifiable class of two or more persons with a cause of action against the defendant or defendants.
3. Commonality—The claims of class members must raise common issues.
4. Preferable procedure—A class proceeding must be preferable for the resolution of the common issues as considered through the lens of access to justice, judicial economy, and behavior modification.
5. Representative plaintiff—There must be a representative plaintiff who would fairly represent the class per a workable litigation plan and without a conflict of interest.

In the past year, we have seen various trends emerge in the treatment of proposed class proceedings during motions for certification—particularly in the treatment of the cause of action and the preferable procedure components of the certification test.

Trends in Assessing the Cause of Action Criterion

Canadian courts generally view the cause of action criterion as being a low threshold for a plaintiff to meet, and a claim will be deemed satisfactory unless it has a radical defect or it is plain and obvious that the claim cannot succeed (see 176560 Ontario Ltd. v. Great Atl. & Pac. Co. of Can. Ltd., 2002 CanLII 6199, para. 19 (Can. Ont. Super. Ct.)).

Recent trends indicate that while the threshold is low, it is not a mere formality that the court will accept that the plaintiff pleaded a valid cause of action. In Del Giudice v. Thompson, 2024 ONCA 70 (Can.), for example, the putative class proceeding was not certified as the plaintiff failed to plead a valid cause of action despite making numerous amendments to the pleading. In refusing certification, the court also ordered that the plaintiff was not granted leave to make any further amendments. Del Giudice serves as an important reminder that Canadian courts have a gatekeeping role and will dispose of claims at an early stage if they are doomed to fail.

Relatedly, we have seen an increase in claims based in “systemic negligence” causes of action such as Carcillo v. Canadian Hockey League, 2023 ONSC 886 (Can.) (hazing), Banman v. Ontario, 2023 ONSC 6187 (Can.) (psychiatric treatments), and Robertson v. Ontario, 2022 ONSC 5127 (Can.) (provincial response to COVID-19). While systemic negligence claims are not novel claims, recent jurisprudence has brought about important judicial commentary on the scope of what must be pleaded for a systemic negligence claim to meet the cause of action criterion. For example, in Pugliese v. Chartwell, 2024 ONSC 1135 (Can.), a case of eight proposed class proceedings brought against corporate, municipal, and independently operated long-term care facilities for their response to COVID-19, the court found that the responsibility for systemic negligence must be shown to move from top down, not from bottom up and not sideways across separate corporate groups (Pugliese at para. 56). The decision indicates that there must be material facts pleaded that demonstrate an issue with the policies that govern a defendant’s enterprise, as opposed to idiosyncratic instances of noncompliance with policies by those on the front lines of implementing such policies.

Pugliese further indicates that the so-called Ragoonanan problem—that there must be a representative plaintiff with a cause of action against each named defendant—is still operational in Ontario class proceedings. The court certified the Pugliese class proceeding against the corporate defendants, who each owned dozens of care homes that were individually named in the action. Certification was granted despite the plaintiff putting forward only one representative plaintiff with a claim against one of the corporate defendant’s care homes. The court circumvented the Rangoonan problem based on “enterprise liability”—namely, that there only needs to be a representative plaintiff with a cause of action against one corporate defendant home, so long as that corporate defendant’s enterprise links the individually named defendant homes.

Trends in Assessing the Preferable Procedure Criterion

In 2020, the Ontario legislature introduced amendments to the provincial Class Proceedings Act, which changed the test that a plaintiff must meet to demonstrate that the proposed class proceeding is the preferable procedure. In Banman, we received the court’s first determination under the new preferable procedure rules. The decision in Banman confirmed what many class action litigators had assumed—that the amendments were intended to make the preferable procedure test stricter. These changes require the court to look critically at whether the proposed class proceeding is “superior” to other avenues of relief and whether the proposed common issues “predominate” over the individual issues raised in the plaintiff’s claim.

This strictness of the new test is evidenced by Canadian courts’ recent rejections of claims based purely on the creation of risk of harm or the alleged increase in the risk of harm. In a string of recent cases across the country, class actions judges have repeatedly refused to certify claims where the plaintiff has failed to demonstrate compensable harm beyond the mere risk or alleged increase in risk of harm:

• Hoy v. Expedia, 2024 ONSC 1462 (Div. Ct.) (Can.), an appeal of a putative class proceeding wherein the plaintiff claimed that the travel site had misrepresented the limited availability of hotel rooms to induce hotel-seekers to book rooms.
• Larsen v. ZF TRW Automotive Holdings Corp., 2023 BCSC 1471 (Can.), a claim brought on behalf of vehicle owners whose airbag modules were subject to a recall and repaired.
• Palmer v. Teva, 2024 ONCA 220 (Can.), an appeal from a putative class proceeding wherein the plaintiff claimed on behalf of a class of persons who were prescribed medication that was alleged (under suspect scientific opinion) to increase the risk of cancer.

In each case, the court found that risk of injury was not sufficient to meet the required test and that the plaintiff had not demonstrated that two or more persons had suffered a compensable injury. In Expedia, the court wrote that the preferable procedure criterion was not satisfied because there can be no access-to-justice issues where there is no evidence that two or more putative class members suffered a compensatory harm (Expedia at para. 4).

Trends in Class Proceedings Following Certification

Finally, recent Canadian class action jurisprudence indicates that the protocol following certification is not a formality and the court will continue to exercise its discretion to ensure that the proceeding remains consistent with the goals of class proceedings. For instance, in Kwong v. iAnthus Capital Holdings Inc., 2024 ONSC 1311 (Can.), the court issued an important reminder that a court’s duty is not to merely provide its stamp of approval on a settlement negotiated at arm’s length by counsel. The plaintiff must demonstrate, through evidence, that any proposed settlement is fair, reasonable, and in the best interests of the class, and Canadian courts have not hesitated to send the parties back to the negotiating table if the settlement fails to address those key markers.

In Duguay c. General Motors du Canada ltée, 2023 QCCS 3223 (Can.), despite authorizing the plaintiff’s claim as a class proceeding, the Quebec court struck the plaintiff’s claim at the merits assessment stage for want of any reasonable prospect of recovery. The court found that the plaintiff had failed to produce strong evidence of the defendant’s alleged misconduct to support the allegations of the claim, and resultingly dismissed the plaintiff’s claim.

Counsel involved in Canadian class proceedings should therefore consider the above decisions when making strategic decisions on cost-saving measures such as forgoing cross-examination of witnesses or proceeding with a limited evidentiary record, as doing so may jeopardize the viability of the claim pre- or post-certification.

Conclusion

Though each case must be assessed on its own factual and legal basis, understanding the trends in Canadian class actions allows class counsel of record and monitoring counsel to anticipate the strengths and weaknesses of their case and develop their strategies accordingly. This is especially important in the handling of class proceedings faced by large multinational corporations across jurisdictional lines.